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Comerica Bank’s Arizona Economic Activity Index increased 0.1 percentage points in May to a level of 112.5.

Comerica Bank's Arizona Index Climbs

August 1, 2018
By Robert A. Dye, Ph.D., Daniel Sanabria

Comerica Bank’s Arizona Economic Activity Index increased 0.1 percentage points in May to a level of 112.5. May’s index reading is 13 points, or 13 percent, above the index cyclical low of 99.5. The index averaged 111.1 points for all of 2017, one point above the average for 2016. The April index reading was 112.4.

The Comerica Bank Arizona Economic Activity Index registered its fourth consecutive monthly gain in May. The Arizona Index has not declined since April 2017. The components were mixed in May however, suggesting that the Arizona economy is still vulnerable to cooling. Five out of nine sub-indexes were positive in May. They were nonfarm employment, house prices, industrial electricity demand, hotel occupancy and enplanements. The four negative components were unemployment insurance claims (inverted), housing starts, total state trade and state sales tax revenue. So far in 2018, Arizona job growth looks a little firmer than it did in 2017. Through the first half of the year, 7,650 jobs per month have been added, on average. This helped to lower the state unemployment rate to 4.7 percent in May and June, still well above the low of 3.6 percent from mid-2007. Even though national home construction data was soft through early summer, Phoenix-area construction has been strong. According to the Arizona Republic, new houses are being built this summer at the fastest pace in 10 years. The Case-Shiller home price data shows that Phoenix-area house prices were up 7.3 percent in May over the previous 12 months. Hopes for a resolution this year to the stalled NAFTA negotiations are rising. Almost half of Arizona international exports go to Canada and Mexico, with Mexico being Arizona’s top trading partner.

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